2013 (12) TMI 84 - AT - Central Excise

Application for Rectification of Mistake - Eligibility of deemed credit - Entitlement to the benefit of Notification No. 202/88 Held that - Goods exempted to Nil rate by an exemption Notification, issued under Sec. 5A of the Central Excise Act, 1944, has to be considered as goods on which no duty is paid - Continuation of mention of ship breaking material under the description of inputs of the Table to Notification No. 202/88-C.E. after 20-5-1988 will be for those materials which are lying in the country after 25-7-1991 but were manufactured and cleared before 28-2-1993 i.e. the date of Notification No. 63/91-C.E. - The value of clearances of dutiable goods not entitled to exemption under Notification No. 202/88-C.E. are required to be included in the value of clearances during 1993-94. For determining eligibility of the small scale exemption value of clearances of 1992-93 were required to be taken into consideration - Small scale eligibility and payment of duty in a financial year is dependent upon the value of clearances of the preceding financial year as well as the quantum of clearances in the relevant financial year - the value of dutiable clearances up to 28-2-1994 was required to be taken into consideration for calculating the value of clearances and duty liability during the period 1-3-1994 to 31-3-1994, when the goods of heading 72.30 got fully exempted under exemption Notification No. 44/93-C.E., dated 28-2-1993 There is no mistake apparent from the records while passing order dated 5-5-2011 - 18-5-2011 Decided against Assessee.

Summary

Issues involved:
1. Eligibility of deemed credit under Notification No. 202/88-C.E.
2. Denial of benefit under Notification No. 1/93-C.E.
3. Interpretation of exemption notifications for ship breaking materials.
4. Calculation of duty liability based on clearances and exemptions.

Analysis:

1. Eligibility of deemed credit under Notification No. 202/88-C.E.:
The appellant contended that they were entitled to the benefit of Notification No. 202/88-C.E. as ship breaking materials continued to be chargeable to NIL rate of duty. The Tribunal noted that the ship breaking material was exempted under Notification No. 44/93-C.E. and not under Notification No. 202/88-C.E. The appellant's argument that 'NIL' rate is a rate of duty was rejected, emphasizing that goods exempted to 'Nil' rate by an exemption Notification are considered as goods on which no duty is paid. The Tribunal concluded that the exemption under Notification No. 202/88-C.E. was not admissible to the appellant for the relevant period.

2. Denial of benefit under Notification No. 1/93-C.E.:
The appellant argued that they were wrongly denied the benefit of Notification No. 1/93-C.E. due to exceeding the aggregate turnover. The Tribunal clarified that the turnover of the preceding financial year had to be considered for small scale exemption eligibility. The value of clearances of dutiable goods not entitled to exemption under Notification No. 202/88-C.E. was required to be included in the value of clearances during the relevant financial year. The Tribunal upheld the denial of small scale exemption based on the clearances and duty liability calculations.

3. Interpretation of exemption notifications for ship breaking materials:
The Revenue contended that the appellant was not eligible for exemption under Notification No. 202/88-C.E. and Notification No. 1/93-C.E. due to using ship breaking material as raw material. The Tribunal analyzed the historical notifications and clarified that the exemption limits and conditions were not met by the appellant during the relevant periods. The Tribunal emphasized the need to consider the specific provisions of each notification for determining eligibility and duty liability.

4. Calculation of duty liability based on clearances and exemptions:
The Tribunal considered the show cause notices issued to the appellant regarding the denial of exemptions and the proposed duty demands. It was established that the appellant's claims for exemption under specific notifications were not valid based on the applicable rates and conditions. The Tribunal rejected the appellant's arguments and upheld the duty demands as per the provisions of the relevant notifications and Central Excise Act.

In conclusion, the Tribunal rejected the Review Applications filed by the appellants and answered the Review Application filed by the Revenue, affirming the orders passed based on the detailed analysis of the issues and legal provisions involved.